Market Musings 200926: Watch Micron for clues on Tech direction

Market Musings 200926:
Watch Micron for clues on Tech direction

Podcast this week:
Reaping the benefits of Agribusiness (click link to listen)

Agribusiness is emerging as one of the most compelling long-term investment themes within the real economy. Spanning the entire agricultural value chain, from crop production and farming inputs to food processing and distribution, the sector is benefiting from a combination of structural demand growth and tighter global supply conditions.​

Geopolitical tensions have disrupted agricultural markets in recent years, pushing up the prices of key commodities such as wheat, corn and soybeans, while also increasing the cost of essential inputs including fertilisers. At the same time, industry consolidation has strengthened the competitive position and profitability of leading agribusiness companies.​

Looking ahead, the sector stands to benefit from powerful secular trends. Farmland remains a scarce resource, global food demand continues to rise, and growing middle-class populations are driving increased consumption of higher-value food products. Against a backdrop of persistent inflation and renewed investor interest in real assets, agribusiness offers a differentiated source of long-term growth and diversification.​

DBA Agriculture ETF (in USD) close to highest since 2014

Micron at a decision point: will determine near-term Tech performance

The epicentre of euphoria over the Artificial Intelligence boom has been in High Bandwidth Memory (HBM) amongst other AI-related subthemes. Put simply, the growth of demand for AI large language models has sparked a huge investment wave in AI-dedicated data centres, which require increasing amounts of this type of memory. 

The manufacture of HBM is dominated currently by 3 major memory semiconductor companies (for now, until the Chinese get up to speed): Micron Technology (NSQ:MU) in the US, Samsung Electronics (KRX:005930) and SK Hynix (KRX:000660) in South Korea.

The Micron chart below demonstrates the near-300% gain  in Micron's share price from April to July, before then consolidating in what is known in Technical Analysis as a symmetrical triangle formation. 

Micron has been a star performer in 2026

 Whether Micron breaks out either above or below this triangle in the next few days should give us a strong indication of the direction of the AI investment theme more broadly, as it has been a leading beneficiary of the AI investment trend up until now.

Interestingly, semiconductor maker AMD posted a similar triangle pattern a few weeks ago after a similar strong run-up: this resolved ultimately to the upside, continuing the prior uptrend. 

AMD broke out of a triangle pattern to the upside

 

Should Micron be able to achieve the same upside breakout, other memory makers and the South Korean KOSPI index should follow, as should the AI theme (Global X Artificial Intelligence & Technology ETF (NMQ:AIQ) ) more broadly. 

Global X AI ETF may be poised  to follow Micron higher

In Europe, one semiconductor company I am keeping my eye on is STMicroelectronics (EPA:STMPA). This stock has seen a particularly severe correction following the huge rally earlier this year. Famed hedge fund manager Stanley Druckenmiller has made ST Micro a relatively large (4.5%, worth $232m) position in his Duquesne family office portfolio in recent months. Consensus analyst forecasts put STM's average price target at $78, 57% above current prices (EUR43.46, $50.18).

STMicroelectronics has pulled back 37% from June peak 

I will look to add to my position in the KOSPI index - Franklin FTSE Korea UCITS ETF (LON:FLRK) - if Micron achieves an upside breakout. 

South Korean stocks remain cheap on valuation at c. 6x forward P/E even after their strong share price performance - as earnings forecasts have risen even faster this year following very strong results on the back of seemingly insatiable AI investment demand for their memory chips. 

Korea ETF (in GBP)  

Keep your eyes also on the AI infrastructure power theme e.g. First Trust Nasdaq Cln Edge SG Infra UCITS ETFAUSD (LON:FGRD) - that electricity-hungry data centres require greater investment in both electricity generation and transmission capacity both in the US and worldwide. Should Micron break out, then this AI subtheme could also follow. 

GRID electricity infrastructure ETF has consolidated since May

 

Good luck and watch long-term bond yields closely (see last week's Market Musings)!

Best

Edmund